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Publishers could follow Random's agency move
01.01.70 | Graeme Neill
Random House UK's switch to the agency model this week could lead other publishers to follow suit, despite the Office of Fair Trading investigating e-book pricing.
The publisher's switch on Tuesday meant it has around 6,000 of its e-books available through the iBookstore. However, it has yet to impose agency pricing across all retailers.
When the OFT launched its investigation in February, many expected publishers would halt a move to agency pricing until the probe was resolved. However, RHG’s move could influence opinion, with Quiller Publishing m.d. Andrew Johnston saying: “I think the fact that Random House has gone over will probably drive other publishers to go down a similar route.
“It will perhaps give other publishers the idea that it might work, but it’s not an entirely satisfactory arrangement [with the OFT investigation still ongoing].”
This follows Random House US’ adoption of the agency model in March. Evan Schnittman, Bloomsbury managing director, group sales and marketing, said: “When Random House US went to agency, it was just a matter of time one assumed [before RH UK made the switch].”
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dont do it !Dont follow like elephants tail to trunk- keep outside the Agency model it is a price fixing scheme, dont make it a cartel price fixing scheme
Don't be so daft, @FOOTSIE 100. A publisher being able to sell their products at a price they think is fair to their author and their investment - what's wrong with that? If your clients decided they'd only pay you £2 an hour, would you work for them any more? You would not. You don't have to buy a book if you don't think the content is worth the price - a small price to pay for hours of entertainment, in my view, even at £10 or more. Many people would like festival tickets to be cheaper, it doesn't mean they should be - the organisers have to pay for the venue, the flyers and the performers.
I am glad Random House have joined the agency model, and I hope many more publishers stand up to the insidious belief that this is price fixing - it isn't. Amazon could choose to take a loss by selling it at less than the price the publishers charged them, but of course they won't - why should the publishers?
Does anyone have an idea when the OFT are due to report?
You forgot to mention the customer Real Book Lover , that is where the money actually comes from , and they will not put up with it , just see . I have been in this game a very long time .
@real book lover
You need to re-examine the Agency Pricing model, RBL. The reason it's considered price-fixing is that Amazon, and all other e-tailers, are NOT allowed to change or lower the price on the books. Prior to the Agency model, Amazon was paying wholesale prices to the publishers and then further discounting the e-Books. So that $9.99 price on new books that Amazon was charging about 18 months ago meant that they were likely paying $12-$13 for the book and then eating a few dollars in profits. They were using the loss-leader approach in an attempt to increase the sales of the Kindle format, which to their mind (being that it's a closed format) would give them further leverage with publishers in the future.
Enter Apple, who told the publishers that they could set whatever price they liked and Apple would abide by it. Apple wanted content and knew that the publishers HATED Amazon's model, since it undermined the prices they wanted to charge. The thinking went that if Amazon was charging $9.99 for a $15 book, consumers wouldn't want to pay more than $9.99 for ANY e-book. To the publishers, for whom physical vs digital wasn't that big of a deal (as printing is pretty cheap), the price Amazon wanted to set for e-Books was terrifying.
The publishers, who now had Apple standing in their corner, turned around and told Amazon to adopt their pricing model or they'd pull their books from Amazon's store. The rest is history.
What you have now is a cartel of publishing companies who are basically telling e-Publishers that unless they allow them to fix prices (yes, I did say FIX prices), they will not get the content. Only when the publisher decides to lower the price will you see the cost of these books decline. Amazon, Apple, and B&N will not be able to sell these books at any discount because of the Agency Model.
So instead of finding ways to use slightly lower pricing and the near instant-gratification of e-Publishing to expand readership (and possibly profits), the publishers have decided that they'd rather tighten their grip and hope that book sales remain the same. I'm not an analyst, so I can't tell you which strategy is preferable. All I can tell you is that we, as consumers, are paying an inflated price due to what I can only describe as price fixing.
dont do it !Dont follow like elephants tail to trunk- keep outside the Agency model it is a price fixing scheme, dont make it a cartel price fixing scheme
Don't be so daft, @FOOTSIE 100. A publisher being able to sell their products at a price they think is fair to their author and their investment - what's wrong with that? If your clients decided they'd only pay you £2 an hour, would you work for them any more? You would not. You don't have to buy a book if you don't think the content is worth the price - a small price to pay for hours of entertainment, in my view, even at £10 or more. Many people would like festival tickets to be cheaper, it doesn't mean they should be - the organisers have to pay for the venue, the flyers and the performers.
I am glad Random House have joined the agency model, and I hope many more publishers stand up to the insidious belief that this is price fixing - it isn't. Amazon could choose to take a loss by selling it at less than the price the publishers charged them, but of course they won't - why should the publishers?
Does anyone have an idea when the OFT are due to report?
You forgot to mention the customer Real Book Lover , that is where the money actually comes from , and they will not put up with it , just see . I have been in this game a very long time .
@real book lover
You need to re-examine the Agency Pricing model, RBL. The reason it's considered price-fixing is that Amazon, and all other e-tailers, are NOT allowed to change or lower the price on the books. Prior to the Agency model, Amazon was paying wholesale prices to the publishers and then further discounting the e-Books. So that $9.99 price on new books that Amazon was charging about 18 months ago meant that they were likely paying $12-$13 for the book and then eating a few dollars in profits. They were using the loss-leader approach in an attempt to increase the sales of the Kindle format, which to their mind (being that it's a closed format) would give them further leverage with publishers in the future.
Enter Apple, who told the publishers that they could set whatever price they liked and Apple would abide by it. Apple wanted content and knew that the publishers HATED Amazon's model, since it undermined the prices they wanted to charge. The thinking went that if Amazon was charging $9.99 for a $15 book, consumers wouldn't want to pay more than $9.99 for ANY e-book. To the publishers, for whom physical vs digital wasn't that big of a deal (as printing is pretty cheap), the price Amazon wanted to set for e-Books was terrifying.
The publishers, who now had Apple standing in their corner, turned around and told Amazon to adopt their pricing model or they'd pull their books from Amazon's store. The rest is history.
What you have now is a cartel of publishing companies who are basically telling e-Publishers that unless they allow them to fix prices (yes, I did say FIX prices), they will not get the content. Only when the publisher decides to lower the price will you see the cost of these books decline. Amazon, Apple, and B&N will not be able to sell these books at any discount because of the Agency Model.
So instead of finding ways to use slightly lower pricing and the near instant-gratification of e-Publishing to expand readership (and possibly profits), the publishers have decided that they'd rather tighten their grip and hope that book sales remain the same. I'm not an analyst, so I can't tell you which strategy is preferable. All I can tell you is that we, as consumers, are paying an inflated price due to what I can only describe as price fixing.